Uncertainty and International Climate Change Negotiations

Yiyong Cai, Warwick McKibbin

    Research output: Contribution to journalArticle

    Abstract

    Because issues associated with climate change are historically unprecedented and thus policymakers do not have a prior distribution over possible outcomes, the usual theoretical approach based on governments maximizing expected utility may not be suitable for analysing climate policy choice. Under an alternative plausible assumption that policymakers act strategically but choose the policy that incurs the highest possible gain in theworst-case scenario, this paper shows howcollectivism can be inferior to unilateralism in both carbon mitigation and economic loss minimization. Our proposed approach provides a possible explanation for several paradoxes in the existing literature in relation to uncertainty and climate policy negotiation. It also provides an analytical framework that can be applied to numerical simulations of international climate policy games.
    Original languageEnglish
    Pages (from-to)101-115
    JournalItalian Economic Journal
    Volume1
    Issue number1
    DOIs
    Publication statusPublished - 2015

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